By David Lawder and Andrea Shalal

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen advised Reuters on Friday that the U.S. is taking a look at additional sanctions on “darkish fleet” tankers and won’t rule out sanctions on Chinese language banks because it seeks to cut back Russia’s oil income and entry to international provides to gas its battle in Ukraine.

Yellen stated in an interview that the U.S. and its allies additionally might contemplate decreasing their $60-per-barrel oil value cap on Russian oil, which prohibits Western insurance coverage and maritime companies on cargoes above that stage.

The Treasury has already sanctioned particular person tankers and their homeowners for working above the value cap and might do extra on this space, Yellen added, suggesting further measures within the 5 weeks earlier than she leaves workplace. 

“There are a selection of potentialities right here. We do not preview sanctions, however we’re at all times taking a look at oil revenues and if we are able to discover methods to additional impair Russian oil revenues, that will, I feel, strengthen Ukraine’s hand. That continues to be on our listing,” Yellen stated.

Earlier this week, Yellen stated softness within the oil market presents a possibility for extra sanctions. Benchmark traded at $74.50 per barrel on Friday, down from $85.57 when the $60 cap was set in December 2022.

President Joe Biden’s administration has been racing to shore up help for Ukraine earlier than President-elect Donald Trump takes workplace on Jan. 20, given the Republican chief’s frequent complaints about the price of U.S. help for Ukraine.

CHINESE BANK CONCERNS

U.S. Treasury officers proceed to have conversations with their Chinese language counterparts on efforts to detect monetary establishment exercise that may very well be aiding transactions associated to Russia’s battle effort. Yellen stated these discussions have been aided by efforts to rebuild U.S.-China financial and monetary communications over the previous two years.

“I completely wouldn’t rule out the likelihood we might sanction a person financial institution if we had the required stage of … proof to have the ability to put sanctions on,” she stated. “However we additionally do have a channel the place we have been capable of focus on particular considerations, and typically that may very well be ample as nicely.”

She stated warnings to bigger Chinese language banks have been profitable, making them “very cautious” of sanctions that will minimize them off from dollar-based transactions. In an govt order a few 12 months in the past, Biden gave Treasury the authority to levy secondary sanctions on monetary establishments that facilitate war-related transactions.

As Russia’s economic system turns into extra dominated by army manufacturing, it’s changing into tougher to tell apart between strictly business and war-related offers. 

“Authorities in China acknowledge that our use of those sanctions could be a critical risk with very hostile penalties,” Yellen stated. “They need to commerce with Russia, however they don’t need their banks sanctioned.”

COMMUNICATION CHANNELS 

Yellen stated the ultimate assembly of the U.S.-China Monetary Working Group will happen subsequent week within the northeast Chinese language metropolis of Tianjin, however sanctions won’t seemingly be a significant function. As a substitute, it should give attention to monetary stability points, together with “tabletop” workouts on learn how to take care of potential monetary crises.

Yellen stated it was vital for the Trump administration to have open channels of communications with China, including: “I feel you’ll be able to’t simply have leader-to-leader conferences. The connection needs to be developed at a senior official employees stage, and we have labored constructively on a variety of issues.”

Whereas the dialogue has not modified China’s state-led, export-driven financial mannequin, it has allowed the U.S. to elucidate actions like software of steep tariffs on electrical automobiles.

Requested a few Reuters report this week that Beijing is contemplating weakening its yuan forex to counteract Trump’s tariff plans, Yellen stated China in recent times has been doing “the precise reverse,” pushing up the yuan’s worth in opposition to the greenback. That evaluation was detailed in Treasury’s most up-to-date semi-annual forex report, which discovered no manipulation by main U.S. buying and selling companions.

She declined to touch upon Beijing’s particular forex plans, however stated the U.S. Treasury has instruments to react strongly to handle forex manipulation. Bessent is anticipated to supervise the Treasury’s subsequent forex report, which is due in April. 

“I am not going to be right here, however my guess is that Treasury will proceed to push again if it thought that there was forex manipulation,” Yellen stated.

Peter Navarro, who’s Trump’s designated White Home commerce adviser, additionally advised Reuters earlier on Friday that Trump’s Treasury Division wouldn’t look “fondly” on any makes an attempt by U.S. buying and selling companions to control their currencies.